Your credit and mortgage
When applying for several types of credits such as a mortgage, the lender will obtain your credit score which will determine if you’ll be able to qualify or not. Typically, a higher credit score means you have a have better shot of getting approved, with “a reasonable rate” benefits.
A Mortgage affects your credit history
Primarily, your payment history influences your credit score. The 15-30 years payment of a mortgage will add to your credit age and how long you’ve had it, supposing you are paying on-time. Your credit score will drop, however, if you miss payments deadline.
Mortgage help diversify your credit
Type of credits such as credit cards, mortgage or auto loans also have an impact on your score, but not as profound as making on-time payments. For credit card, it’s a revolving or reusable credit while mortgages are installment loan. Generally, the more diversified your credits are, the better you are. Make sure you find credit tips to help improve your score if its too low.
How it works
Your lender will assess your credit to decide what you’ll pay when you are applying for a mortgage. This process requires a solid analysis of your credit. Sourcing data from every major credit bureaus, your lender will assess your credit score. The lender will determine what you will pay using the middle score.
If you’ve had a lot of inquiries the credit inquiry may decrease your credit score by a few points but should regain and build your credit in the long run, and you can find the inquiry on your credit report. Alternatively, you can check and monitor your credit report on NerdWallet.
Making several inquiries will not affect your credit scores if you are looking for a mortgage, and such inquiries made in the last 45 days will be regarded as a single inquiry by FICO, which often generates the scores.
A Good Credit Score to help you Secure a Mortgage
The information contained in your Credit Report will affect your Credit Score. The score range is wide which can also contribute to your credibility in front of a lender. The higher the credit score you have, the higher your chances of securing the mortgage. If you live in California your chances of getting a mortgage improve if you have a good credit report. Don’t forget to look up California mortgage rates to get the latest information.
What to do if Your Mortgage Credit Check is Poor?
You can still get a mortgage even if you have bad credit, but the process can be tough because you may have to deposit more and also get higher interest rates.
Your lenders are curious about your ability to repay monthly without having to default. By managing simple stuff such as credit cards or mobile phones contract will boost your score and assure the mortgage lender you are capable of repaying.
Boost your Credit Score using the following tips and suggestions
- The most important is to repay on time. This way, you’ll avoid extra charges and the “late or missed payment” note on your credit report.
- Do not apply for credit, at least for 6 months, before your mortgage application. This is crucial because a hard search will be attached on your report every time you request for credit.
- Companies can quickly confirm your residence with various resources.
- Do not exceed your credit limit. Living below your threshold or keeping your balance at 25 less can increase your score.
- Always ensure the information on your credit score is up-to-date and correct to avoid potential hassle or drop in score.
- If any information such as payment or address needs correction, contact your lender for a modification.